Risk-Based AML/CFT Regulations for Effective Supervision

Risk-Based AML/CFT Regulations for Effective Supervision

S. G. Sisira Dharmasri Jayasekara
Copyright: © 2021 |Pages: 31
DOI: 10.4018/978-1-7998-8758-4.ch009
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Abstract

Money laundering is a global threat that requires an urgent attention of policymakers to protect financial systems from criminals. A jurisdiction is required to develop a regime to control or mitigate the impact of crimes that have multi-dimensional impacts on global economies. Prevention of global crimes is a challenge not only to jurisdiction but also to the global standard setters. The final impact of these crimes hit the financial system and other regulated institutions. Anti-money laundering/combating the financing of terrorism (AML/CFT) supervision is an emerging area; therefore, a sound regime of AML/CFT supervision is essential to support global initiatives in this regard. This chapter discusses the implementation of a sound risk-based AML/CFT supervision of financial institutions as well as designated non-finance business and professions. This is important for AML/CFT regulators to strengthen the AML/CFT regime of a country.
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2. Global Impact Of Black Money And Financial Crimes

A jurisdiction is required to develop a regime to control or mitigate the impact of predicate offences indicated in FATF recommendations. UNODC (2018) states that the nature of financial crimes such as tax evasion, money laundering, bribery, and other forms of corruption means that the same activity may violate several laws. Therefore, combating these offences is challenging for any jurisdiction as well as to the global standard setters. The FATF recommendations identify 21 such offences as shown in Table 1.

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